Palantir, Nvidia and Rigetti Computing were among the tech stocks that dropped on Monday as investors took profits and dumped more speculative names amid rising interest rates. The sell-off comes as the 10-year Treasury yield touched its highest level since late 2023 on Monday. A strong jobs report on Friday cast doubt over whether the Federal Reserve will continue cutting interest rates this year.
“While tech stocks made major gains as interest rates dropped last year, both Wall Street and Main Street have grave doubts about any further rate cuts by the Fed,” said AXS Investments CEO Greg Bassuk. Monday’s moves also followed a losing week for many key tech and quantum computing names. Truist’s Keith Lerner noted that leaders eventually fall in a corrective phase.
“That’s a necessary part of a corrective phase in our view and we are likely further along in this correction than many investors recognize since many stocks peaked in late November, early December,” Lerner stated. Other technology stocks also dropped Monday, with the semiconductor sector declining 4%.
Tech stocks feel investor scrutiny
The declines came amid news of more U.S. government curbs on AI chip exports. Quantum computing stocks, which got a boost from last year’s positive Alphabet chip announcement, also plunged, with some losing up to 33%. The selloff followed commentary from Meta CEO Mark Zuckerberg that echoed Nvidia CEO Jensen Huang’s remarks last week, suggesting that the tech sector might face ongoing challenges.
Megacap tech names also fell, with some dropping more than 1%, while others edged down less than 1%. Nvidia’s stock slipped even as the AI chipmaker announced a series of AI healthcare partnerships, as the Biden administration proposed new rules on exporting AI chips. Nvidia called the new restrictions, meant to limit AI chip sales to certain countries, “misguided” in a blog post Monday.
Shares of quantum computing companies continued to slide Monday after Meta CEO Mark Zuckerberg followed the lead of Nvidia CEO Jensen Huang with comments throwing cold water on the sector. In a Friday appearance on “The Joe Rogan Experience,” Zuckerberg said he believes quantum computing is “still quite a ways off from being a very useful paradigm.” That followed Huang’s comments last week that “very useful quantum computers” are still 15 to 30 years away. Rigetti Computing shares plunged 32%, while D-Wave Quantum lost close to 34%, IonQ fell 14%, and Quantum Computing dropped 27%.
